Union Budget 2016-17….Highlights

Finance Minister Arun Jaitley unveiled a budget for the poor on Monday(29 February 2016), announcing new rural aid schemes and skimping on a bank bailout, in a strategy shift that seeks to boost his ruling party in coming state elections.

Jaitley reiterated a forecast that India would grow by 7.6% in the fiscal year that is drawing to a close. He said the government wanted to spread the benefits of growth more widely among India’s 1.3 billion people, but that he would stick to the government’s existing fiscal deficit target for the coming year.

Here are the highlights of Jaitley’s budget for the fiscal year that begins on April 1.***********************************************************

INTRODUCTION***********************1. Growth of Economy accelerated to 7.6% in 2015-16.

2. India hailed as a ‘bright spot’ amidst a slowing global economy by IMF. Robust growth achieved despite very unfavourable global conditions and two consecutive years shortfall in monsoon by 13%

3. Foreign exchange reserves touched highest ever level of about 350 billion US dollars. Despite increased devolution to States by 55% as a result of the 14th Finance Commission award, plan expenditure increased at RE stage in 2015-16 – in contrast to earlier years.

CHALLENGES IN 2016-17**********************************1. Risks of further global slowdown and turbulence.

1. ‘Transform India’ to have a significant impact on economy and lives of people.

2. Government to focus on –

a)ensuring macro-economic stability and prudent fiscal management.b) boosting on domestic demandc) continuing with the pace of economic reforms and policy initiatives to change the lives of our people for the better.

3. Focus on enhancing expenditure in priority areas of – farm and rural sector, social sector, infrastructure sector employment generation and recapitalisation of the banks.

5. Continue with the ongoing reform programme and ensure passage of the Goods and Service Tax bill and Insolvency and Bankruptcy law

6. Undertake important reforms by:

a) giving a statutory backing to AADHAR platform to ensure benefits reach the deserving.b) freeing the transport sector from constraints and restrictionsc) incentivising gas discovery and exploration by providing calibrated marketing freedomd) enactment of a comprehensive law to deal with resolution of financial firmse) provide legal framework for dispute resolution and re-negotiations in PPP projects and public utility contractsf) undertake important banking sector reforms and public listing of general insurance companies undertake significant changes in FDI policy.

6. Special emphasis to sectors such as agriculture, irrigation, social sector including health, women and child development, welfare of Scheduled Castes and Scheduled Tribes, minorities, infrastructure.

7. Mobilisation of additional finances to the extent of ` 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority by raising Bonds.

8. Plan / Non-Plan classification to be done away with from 2017-18. Every new scheme sanctioned will have a sunset date and outcome review.

9. Rationalised and restructured more than 1500 Central Plan Schemes into about 300 Central Sector and 30 Centrally Sponsored Schemes.

10. Committee to review the implementation of the FRBM Act.

SOCIAL SECTOR INCLUDING HEALTH CARE**************************************************************

2. Domestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution.

3. Surcharge levied at 7.5% of undisclosed income will be called Krishi Kalyan surcharge to be used for agriculture and rural economy.

4. New Dispute Resolution Scheme to be introduced. No penalty in respect of cases with disputed tax up to `Rs10 lakh. Cases with disputed tax exceeding `Rs 10 lakh to be subjected to 25% of the minimum of the imposable penalty. Any pending appeal against a penalty order can also 14 be settled by paying 25% of the minimum of the imposable penalty and tax interest on quantum addition.

7. Penalty rates to be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts.

8. Disallowance will be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed under rule 8D of Section 14A of Income Tax Act.

9. Time limit of one year for disposing petitions of the tax payers seeking waiver of interest and penalty.

10. Mandatory for the assessing officer to grant stay of demand once the assesse pays 15% of the disputed demand, while the appeal is pending before Commissioner of Income-tax (Appeals).

11. Monetary limit for deciding an appeal by a single member Bench of ITAT enhanced from Rs 15 lakhs to Rs 50 lakhs.

12. 11 new benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

SKILL DEVELOPMENT***********************

1. Allocation for skill development – Rs 1804. crore

2. 1500 Multi Skill Training Institutes to be set-up

3. National Board for Skill Development Certification to be setup in partnership with the industry and academia

4. Entrepreneurship Education and Training through Massive Open Online Courses